NFL corruption highlights the need to revoke special legal treatment

April 2, 2013

by George Landrith

Most people do not know that the National Football League is treated as a tax-exempt nonprofit organization, nor do they realize that the NFL receives a special broadcast antitrust exemption. None of that makes sense. But on top of it all, the NFL and its commissioner, Roger Goodell, are corrupt and lawless which is one more reason not to give the NFL special tax and legal treatment.

First, the NFL is clearly a for-profit business and should be treated as such. Giving the NFL, a big business with billions in revenues every year non-profit status is absurd. Sports is a big business, not a nonprofit foundation.

Second, there is no good reason to give the NFL special carve outs or exemptions from our nation’s antitrust laws forbidding monopolies. While I generally oppose how antitrust law is used and how it empowers overzealous bureaucrats to micromanage legitimate businesses and stifle innovation, there is simply no reason to give the NFL special exemptions from the law.

It is time for football fans and taxpayers alike to demand that the NFL be treated like any other business. The game does not need special tax breaks or special legal treatment to continue on as the world’s most profitable league.

Third, there are numerous evidences of the NFL’s corruption and lawlessness. But lets start with a recent example that has been in the news. In 2010, the NFL’s collective bargaining agreement with the players association expired so there was a year of professional football without a collective bargaining agreement. From the fan’s perspective nothing really changed — the games went on.

But behind the scenes, the NFL owners and Roger Goodell now admit that they colluded and secretly agreed to suppress the salaries of the players during that uncapped year. During a year that the NFL has a collective bargaining agreement with the players, a salary cap is permissible under the law. But in a year with no agreement with the player’s, it is illegal to collude and secretly impose a salary cap. But that is precisely what the NFL did.

After the 2011 season, the NFL announced that two teams had violated the owners private, secret agreement to keep team payrolls low. The NFL said that the Dallas Cowboys and the Washington Redskins had paid too much in salaries and bonuses to its players during the “uncapped” year. Even though both teams submitted all new contracts to the NFL and even though the NFL approved them, after the fact, the NFL claimed these contracts violated the owner’s secret agreement to keep total salaries low. By so doing, the NFL claimed that both teams had violated the spirit of the NFL owner’s secret agreement — one that was clearly illegal and collusive.

The NFL penalized the two teams that refused to engage in illegal collusion — and punished them precisely because they refused to collude. That is taking corruption to a whole new level.

The NFL penalized these two teams by reducing the amount of money that these two teams could spend on its player’s salaries by more than $45 million. As a result, the teams have been forced to release several of their key players because they simply cannot afford to keep them. And while other teams can sign new players to their team, these two teams have little “salary cap space” to sign new stars. It bears repeating that the NFL not only colluded and violated the law, it is now punishing the teams who refused to participate in violating the law.

It is unlikely that either of the two punished teams will sue the NFL because NFL owners are an elite “club” and challenges to the club’s power will be met with ostracization. Given the billions that are at stake, it may be too risky for most owners to seriously consider challenging the NFL and its brazen lawlessness. But they should. If the NFL had to face an honest and unbiased finder of fact, the NFL would have no leg to stand on.

Quite frankly, the NFL’s corruption is out of control and must be dealt with. People want an honest game, not back-room collusion. The NFL will not continue to grow in popularity if it becomes synonymous with corruption. The league is approaching a tipping point. If these two teams were willing to stand up to the NFL, they might be credited with rescuing the league from its own corruption.

Another example of the NFL’s corruption is the so-called bounty scandal. The NFL announced that the New Orleans Saints paid players, not to play hard or make good plays, but to specifically injure key players on the other team. Goodell told us the proof was iron clad. He named names. He announced harsh and unprecedented penalties. Coaches and players were banished from the NFL. Reputations were ruined and men were defamed.

But then the banished players challenged the decision and the truth came out. Goodell had run a kangaroo court and misrepresented the facts. A three-person arbitration panel unanimously and summarily overturned Goodell’s suspensions and reinstated the players. Goodell was furious. He had been outed.

In a follow-on case, a federal judge referred to Goodell’s actions as “heavy handed,” lacking fundamental “fairness,” and “extremely disturb[ing].” The judge was particularly troubled by the fact that the players were not told who accused them or even specifically what the accusations were and they had no right to face or challenge their accusers.

Despite the obvious overreach, Goodell abused his authority to bully the coaches who did not have the right to arbitration. Because their only hope of reinstatement could come from Goodell, they could not anger him with even a timid challenge. That is the tactic of a corrupt, two-bit dictator, not an honest commissioner. Shame on Roger Goodell and the NFL.

There are other examples of corruption. When New England Patriots coach Bill Belichick was caught redhanded cheating in a way that potentially helped him win three Super Bowls, Goodell imposed a shockingly modest penalty and quickly destroyed the videotape evidence before it could be reviewed. For Goodell, the integrity of the game was secondary to profits. Why was no one banned from football this time? Why was the evidence quickly destroyed? Goodell and the NFL are corrupt.

The NFL should fire Goodell and find a commissioner that will ensure that the league is run efficiently, fairly and with unquestionable integrity. The NFL can deal successfully with tough issues like head injuries and concussions only if the commissioner is widely known for independence, competence and honesty.

But the NFL’s corruption problems go far deeper than Goodell. The problem starts at the top. The owners are the ones who illegally colluded and then tried to punish the two owners who refused to participate in the illegal scheme. The owners need to enroll in a remedial integrity course so that they do not destroy the league that brings them wealth.

In the meantime, Congress should remove both the NFL’s tax-exempt status and its broadcast antitrust exemption. The taxpayers don’t need to subsidize the NFL’s operations and we don’t need to give the NFL special legal concessions.

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George Landrith is the president of Frontiers of Freedom, a public policy think tank devoted to promoting a strong national defense, free markets, individual liberty, and constitutionally limited government. Mr. Landrith is a graduate of the University of Virginia School of Law, where he was Business Editor of the Virginia Journal of Law and Politics. Mr. Landrith was a candidate for the U.S. House of Representatives from Virginia. You can follow George on Twitter @GLandrith.

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